Southern Energy Corp (TSX-V:SOU, AIM:SOUC, OTC:MAXMD) has agreed a deal to acquire the remaining producing acreage in the Gwinville field in Mississippi that it does not already own.
The acquisition assets presently produce around 400 barrels of oil equivalent per day (comprising 99% natural gas) and it is paying US$3.2mln to buy the wells.
Altogether, it is picking up over 8,500 acres that are deemed ‘held by production’ and are seen to have significant redevelopment opportunities.
It comes after Southern Energy began a field redevelopment program in Gwinville with horizontal drilling and multi-stage stimulation undertaken on 10 wells in the company’s own acreage to date.
With this acquisition, the company expects to expand its inventory in Gwinville by around 20%, meanwhile, the expansion is anticipated to provide operational synergies also.
"We are very excited to consolidate the Gwinville Field under one operator at an accretive price for our shareholders,” chief executive Ian Atkinson said in a statement.
He added: “This will be the first time this has been done in over 30 years since Selma Chalk and City Bank early exploration and development started in the 1990s.
“Our team will seek to incorporate these operations with our own, achieving substantial synergies and cost savings that will help drive a very quick return of capital even at current natural gas pricing.”
Atkinson told investors that the financial metrics of the deal are “outstanding”.
“The transaction demonstrates our ability to execute our high value inorganic growth strategy at low cost during periods of weaker natural gas pricing to add accretive, high quality assets to the portfolio that we will eventually grow organically when commodity prices are more supportive,” the chief executive added.
In London, Southern Energy shares gained 1.5p or 7.5% in Tuesday’s early deals to change hands at 21.5p each.